DPM Lauds BoT On Gold Purchasing Program -

Mr Joshua Mganga, the BoT Financial Analyst

By PROSPER MAKENE

DEPUTY Prime Minister and Minister of Energy, Dr. Doto Biteko has congratulated the Bank of Tanzania (BoT) for their move to establish a Gold Purchase Program, a move that aims to help strengthen the value of the shilling during economic crises.

According to BoT, the program offers an opportunity for gold sellers to sell their gold directly to BoT at a competitive international market price. Further, the said program provides that gold sellers will benefit from reduced fees and guaranteed prompt payments when they sell 20% of their gold to the Central Bank.

Speaking on Saturday, October 5, 2024, during the launch of the International Exhibition of Mining Technology held at EPZ Bombambili, Geita Region, Dr. Biteko has praised the Ministry of Mines for the good job of keeping gold reserves through BoT and encouraging miners to sell gold to the Bank at a friendly price.

Dr. Biteko has stressed the importance of miners having gold reserves, as it will help not only strengthen the Tanzanian shilling, but also support the government’s efforts in the sector.

In his remarks to open the Expo here over the weekend, Deputy Prime Minister Dr Doto Biteko encouraged all gold sellers in the country to sell their commodities directly to BoT, ensuring their prompt payment and the best value for their gold.

Tanzania’s mining regulator has been directing all mining firms and traders exporting gold to allocate at least 20 percent of the commodity for sale to the central bank to bolster the bank’s move to diversify its foreign reserve/

Miners and traders, according to the bank, are required to submit the reserved gold to two mineral refineries, Eye of Africa Ltd in the capital of Dodoma and Mwanza Precious Metal Refinery Ltd, located in Mwanza.

Gold is one of the country’s most valuable exports and the approach not only enhances the bank’s reserve assets but also fosters growth and sustainability in the local gold industry.

Recognition of the BoT as the statutory gold dealer aims to harmonise the BoT Act and Mining Act by addressing the existing ambiguity as well as enhancing the purchase of gold by the BoT to ensure the growth of the national gold reserve in the country.

Gold accounts for at least one-third of Tanzania’s exports and is considered one of its strongest currency stabilisation export products and during the financial year 2021/22, gold accounted for approximately 25 per cent of Tanzania’s exports.

Speaking in an interview at the sideline of the expo, Mr Joshua Mganga, the BoT Financial Analyst said that the Central Bank has successfully purchased at least 7kg of gold from small-scale, middle-scale and large-scale miners from 1st to 4th October 2024 as part of a strategic drive to support the expansion of the mining industry and strengthen foreign exchange coffers.

The state has in July last year, decided to allow the country’s central bank to become the statutory gold dealer to enhance the growth of the national gold reserve.

Since it began buying gold from local miners in the last financial year that end in June, the Bank bought a total of 418kg of gold at competitive world market prices.

The BoT Financial Analyst also said that the bank encountered some challenges while implementing the exercise, especially since when decided to start collecting gold directly from the local markets.

“At first, we purchased gold from the government and later on we decided to penetrate directly to the local gold market where we experienced some difficulties which frustrated the exercise,” he said.

Detailing over the expressed difficulties, he said most of the local gold sellers raised concerns about not having enough capital to allow them to maintain surplus gold to sell at BoT, apart from exporting to the external markets.

Together with that, he said the sellers also expressed to have been enjoying tax benefits when exporting their commodities abroad rather than selling to the domestic market, especially at BoT.

To that end, he said the government was arm-twisted to scrap some nuisance taxes which seemed to frustrate the companies and local gold dealers, as well as introducing more friendly tax policies, the development which he said has played a key role in helping to overcome the challenges.

Apart from improving the local gold trade market flow, he observed that the better policies introduced by the government, including the 20 per cent gold purchase obligation as stated in Section 59 of the Mining Act (Cap123) and other incentives to support small-scale mining will likely cause Tanzania’s yellow metal production to rise sharply in future.

“The other useful amendments made in the relevant regulations was the exemption of the one percent inspection fee and reduce the royalty rate to 2 percent, from 6 percent on the supply of gold to BoT, the aim being to incentivise the supply of gold to BOT, to enhance the growth of national gold reserve and in turn address the shortage of US Dollars in Tanzania,” he said

He stated that with the new regulations the local gold mining companies, individual miners and dealers who have been registered to Value Added Tax (VAT) can now claim for input when trading with BoT because the relevant tax has now been zero-rated.